NAV as at 30 June 2023 & Trading Update
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 30 June 2023
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces its unaudited NAV at 30 June 2023.
Quarter Headlines
· Fair value independent valuation of the property portfolio at 30 June 2023 of £208.4 million, a like-for-like increase of 2.03% on the valuation at 31 March 2023.
· NAV per share at 30 June 2023 of 80.77 pence (31 March 2023: 80.44 pence), an increase of 0.4% in the quarter.
· Capital expenditure during the quarter, including asset management initiatives, was £1.96 million.
· NAV total return (including dividends) for the quarter of 2.0% (31 March 2023 quarter 1.0%).
· Rent collection for the quarter expected to be 99.9%.
· Portfolio weighted average unexpired lease term (WAULT) increased from 5.1 years to 5.2 years.
· EPRA Vacancy Rate decreased from 6.7% to 6.0%.
· Dividends totalling 1.25 pence per share (5.00 pence per share annualised) paid in the quarter.
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· Seven asset management deals were completed during the period, securing £437,000 of income per annum.
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Net Asset Value
The unaudited NAV of the Company at 30 June 2023 was £170.69 million, or 80.77 pence per share, an increase of 0.4% on the Company's NAV per share as at 31 March 2023.
|
|
Pence Per Share |
£ million |
|
NAV at 31 March 2023 |
80.44 |
170.00 |
|
Valuation of retained property portfolio |
1.81 |
3.82 |
|
Capital expenditure |
(0.93) |
(1.96) |
|
Income earned |
1.59 |
3.36 |
|
Expenses & finance costs |
(0.89) |
(1.89) |
|
Dividends paid |
(1.25) |
(2.64) |
|
NAV at 30 June 2023 |
80.77 |
170.69 |
The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards ('IFRS'); the EPRA NAV is not reported separately in this update as it is the same as the IFRS NAV.
The NAV incorporates the independent portfolio valuation as at 30 June 2023, but does not include a provision for any accrued monthly dividend.
Overview
The continued economic uncertainty, underpinned by stubbornly high inflation and rising interest rates, has caused the property investment market to pause, with investors adopting a 'wait-and-see' approach and looking for some stability before buying or selling properties. As a result, investment volumes remain below long-term averages and valuations were broadly flat in the quarter, albeit the office sector continues to see the largest declines in value.
According to the MSCI Monthly Index, retail warehousing saw capital value growth of 0.87% during the quarter. The Company's investment portfolio, which is focused on retail warehousing, increased in value by 2.03% during the period. The completion of asset management initiatives contributed to this increase.
The quieter market did not prevent significant progress being made with the conduct of the Strategic Review, with the Board, Investment Manager and other advisers reviewing a wide variety of proposals and options.
However, the Strategic Review did not cause the Company to lose focus on the management of the portfolio, with seven asset management transactions completed during the quarter.
After adjusting for capital expenditure, initial fees in connection with the Strategic Review, and the use of capital to fund the uncovered dividend during the period, the Company's NAV increased by 0.4% in the quarter.
The NAV total return over the quarter was 2.0%, the share price total return was -4.3%. Dividends remained at previous levels.
Strategic review
Earlier this year the Board announced the commencement of a strategic review in order to consider all options available to the Company to maximise value for shareholders, and this process is now nearing completion. The Board is encouraged by the progress made to date in this regard and expects to make a further announcement shortly.
Asset management activity
Seven asset management deals were completed during the period, securing £437,000 of income per annum.
At Prestatyn Shopping Park, having signed an Agreement for Lease (AFL) last quarter, Superdrug completed a 10-year lease with a five-year break option on a 7,539 sq. ft. unit. The new rent is 2% ahead of the independent valuer's ERV.
Also at Prestatyn, Sportswift (Card Factory) and David Jones Furniture Craftsman each extended their leases by five years, at rents in line with the valuer's ERV.
Two transactions have completed at Widnes Shopping Park. The rent payable by Sasa Foods (KFC), who occupy a drive-thru unit of 2,264 sq. ft. has increased by 35% following the completion of a rent review. The new rent is 33% ahead of the valuer's ERV.
In the second transaction at Widnes, pet store Jollyes has signed a 10-year lease with a five-year break option on the 4,998 sq. ft. unit which became available during the quarter following Poundland moving to a larger unit. The new rent is 4.6% ahead of the valuer's ERV.
Lastly, the Company continued its electric vehicle charging point (EVCP) roll out by completing two leases with Osprey Charging who will install three EVCPs at each of Clwyd Retail Park, Rhyl and Wombwell Lane Retail Park, Barnsley. It is expected that new EVCPs will be added across the portfolio in the coming months.
It is encouraging that the level of asset management activity has continued this quarter and covers, lettings, lease extensions and a rent review. It is testament to the strength of the Company's assets that not only do existing tenants want to remain on the parks, but new tenants can see the benefits of the properties and want to be there too.
There are further deals in the pipeline as the Investment Manager continues to progress lettings and lease restructures across the portfolio, with the aim of improving the Company's income stream and reducing the vacancy rate.
Cash and dividend
At the date of this announcement the Company has approximately £45.1 million of cash available for investment and operational purposes. The Company also has £31.2 million of cash held in its debt facility, which is subject to the lender's LTV requirements being met for it to be released for investment purposes.
To provide maximum flexibility for the Strategic Review, the Board has paused the investment of surplus cash until the outcome of the review has been determined. The dividend will therefore remain uncovered and funded from cash resources. Dividend cover for the quarter was 55.5%.
Debt
As at 30 June 2023, the average loan-to-value across the Company's two debt facilities was 38.3%. The Company is compliant with its debt covenants and there are no imminent refinancing events, with £56.9 million maturing in May 2025 and £54.2 million in December 2027.
Summary and outlook
It is encouraging that the property portfolio has increased in value during the period, particularly as the capital growth was driven by positive asset management initiatives rather than from general market movements.
The Company has also performed well on other metrics. The rental value has improved, the WAULT has increased and the EPRA Vacancy Rate has fallen. The Investment Manager continues negotiations with both new and existing tenants who want to lease vacant space or extend leases on existing units. On completion these transactions should further improve the performance of the property portfolio.
Nevertheless, given the economic conditions, the Board remains cautious on the outlook but is comforted by the continued asset management successes and pipeline, and the operational performance of the portfolio.
The Board and its other advisers remain fully engaged with the ongoing Strategic Review and the Board expects to report further to shareholders on the conclusions of this shortly.
Portfolio sector weightings and tenant and locational exposure as at 30 June 2023
Sector
|
Sector |
Exposure (%) |
|
Retail warehouse |
100.0 |
Geography
The portfolio is diversified across the regional markets.
|
Region |
Exposure (%) |
|
Scotland |
29.4 |
|
Wales |
24.9 |
|
North West |
16.3 |
|
Yorkshire |
16.0 |
|
North East |
7.3 |
|
East Midlands |
6.1 |
Top five tenants (contracted income) as at 30 June 2023
|
Tenant |
Exposure (%) |
|
B&Q Limited |
11.5 |
|
Marks & Spencer plc |
9.4 |
|
B&M Retail Limited |
7.9 |
|
Boots UK Limited |
4.6 |
|
Pets at Home Limited |
3.8 |
Valuation yield profile as at 30 June 2023
|
Net Initial Yield |
6.0% |
|
Equivalent yield |
7.1% |
Forthcoming events
The next interim dividend announcement is expected to be made by 3 August 2023. The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP for 30 September 2023, the Company's financial year end. The unaudited NAV per share at that date is expected to be announced in October 2023.
The Company intends to publish its next factsheet shortly, which will be made available on the Company's website at www.ediston-reit.com.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.
Enquiries
|
Will Barnett |
Investec Bank plc |
0207 597 5873 |
|
Calum Bruce |
Ediston Investment Services Limited |
0131 225 5599 |
|
Mercedes Fraser |
JTC |
0208 159 2809 |
|
Ben Robinson |
Kaso Legg Communications |
0203 995 6672 |
|
Stephanie Ross |
Kaso Legg Communications |
0203 995 6676 |
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